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UK Regulation > Associated Legislation And Regulation > Flashcards

Associated Legislation And Regulation Flashcards

1
Q

What is Market Abuse?

A

A statutory offence covering financial market manipulation and insider dealing

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2
Q

What is MAR?

A

Market Abuse Regulation

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3
Q

When did MAR come into effect?

A

2016

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4
Q

Changes MAR brought in?

A

-Extended scope to include trading on non regulated platforms
- adapting rules for new tech
- added spot and derivative commodities

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5
Q

3 key changes between UK MAR and EU MAR after Brexit

A
  • only have to comply with EU authorities if reciprocity is in place
  • FCA takes over from ESMA and EC
  • Updates are from UK treasury not EC
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6
Q

What is consider insider information under MAR?

A
  • Precise information not public which would impact price of financial instrument
  • info relating to pending orders
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7
Q

When does MAR say insider dealing occurred?

A
  • trading on info for yourself or 3rd party
  • cancelling or amending orders
  • recommending someone else to engage in insider dealing
  • making recommendations to others
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8
Q

What obligations do issuers have regarding insider information?

A

Obligation to inform the public asap of insider info concerning the issuer to allow investors to make timely assessments

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9
Q

Examples of market manipulation?

A
  • entering into a transaction to give false signals
  • securing a price (price fixing)
  • fictitious devices
  • spread false info
  • false info re a benchmark
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10
Q

What types of trades does MAR apply to?

A
  • Both unexecuted and executed trades
  • request for quotes
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11
Q

What is STOR?

A

Suspicious transaction and order reporting

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12
Q

When should you tell FCA of suspicion of insider trading or market manipulation?

A

Without delay and includes attempts but without execution (Firms must report ASAP after full investigation)

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13
Q

What should be included in a STOR?

A

-identify of submitter
- description of order (type, price, volume)
- reason for suspicion
- mean of identifying people involved
- any other relevant info

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14
Q

Obligations of a sounding firm?

A
  • consent of person receiving sounding
  • inform person they cannot use that info
  • inform of confidential nature
  • maintain records
  • advise when it ceases to be insider info
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15
Q

When is information considered to have been made public

A
  • published to investors
  • public records
  • readily available to dealers
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16
Q

When is someone considered an insider?

A
  • inside source themselves
  • access to info through employment, office or profession
  • access to a person who is themselves an insider
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17
Q

When does someone commit insider dealing

A
  • deals in price sensitive securities when in possession of inside info
  • encourages someone else to deal
  • discloses inside info
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18
Q

What does CJA define as securities for insider dealing?

A

Shares
Debt securities
Warrants
Depository receipts
Options / Futures
CFDs

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19
Q

What does CJA exclude from insider dealing?

A
  • Commodities (and their derivatives)
  • FX
  • units or shares in collective investment schemes
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20
Q

Defences to insider dealing?

A
  • didn’t expect a profit (or to avoid loss)
  • believed info was widely disclosed
  • would’ve acted in the same way

If just disclosing:
- didn’t expect person to deal
- didn’t expect other person to profit

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21
Q

What are the special defences to insider dealing?

A

Market makers in relation to price stabilisation activities

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22
Q

Defence for insider dealing for market makers?

A
  • acting in good faith in course of business
  • if related to M&A they can say it was to facilitate the deal (will have to prove link)
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23
Q

What is the act of price stabilisation?

A

Agents and stabilising managers can buy securities in the secondary market for a limited time to support the issuance of new securities

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24
Q

4 main forms of market manipulation?

A

Manipulating;
- transactions
- devices
- benchmarks

And dissemination

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25
Q

Legitimate examples of dealing not being insider trading?

A
  • information barriers in place
  • market maker
  • executing for 3rd parties
  • legal obligation
  • inputted before the inside info
  • merger info (so long as info is public at point of merger approval)
  • doesn’t apply to stake building activity
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26
Q

Restriction on trading your company shares?

A

Can’t trade in closed period, 30 days before interim or annual reports

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27
Q

What is money laundering?

A

Process of turning money derived from criminal activity into money that appears legitimate

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28
Q

What is POCA 2002

A

Proceeds of crime act

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29
Q

What did SOCPA 2005 legislation change re ML?

A

It is a potential defence if you can prove act was legal in another country e.g Spainish bullfighting. Secretary if state reserves the right to still consider it illegal

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30
Q

What does the Criminal Finances Act 2017 say?

A

Criminal offences for firms that fail to prevent tax evasion

31
Q

What are MLR 2017 regulations?

A

Detailed regulations on EU ML directives

32
Q

What does the FCA say about ML in SYSC?

A

Provides guidance but refers to JMLSG for further details

33
Q

What is JMLSG

A

Joint money laundering steering group

34
Q

What does JMLSG do?

A

Provide guidance to firms on how to interpret ML legislation, not mandatory but considered best practise. Approved by HMT

35
Q

Who do regulated firms submit suspicions of ML to?

A

National Crime Agency

36
Q

What is a SAR?

A

Suspicious activity report

37
Q

What extra requirement as a result of MLR 2017?

A

Risk assessments
Policies to manage risk
CDD (customer due diligence), SDD and EDD
PEPs (politically exposed persons)
Reliance

38
Q

Punishment for false money laundering statement under 4MLD?

A

Fine and or 2 years in prison

39
Q

What was added to ML legislation under 5MLD?

A
  • High risk factors for EDD (high risk 3rd party country or specific industries)
  • Further details needed on beneficial owners
  • must report companies house discrepancies
  • included crypto activity
40
Q

3 stages of ML?

A

Placement - introduce money in
Layering - moving money around
Integration - final stage when money appears to be clean

41
Q

5 offences of POCA

A

Concealing
Arrangements
Acquisition
Failure to disclose
Tipping off

42
Q

Jail time for ML Concealing / Arrangements / Acquisition offences?

A

Fine and up to 14yrs

43
Q

Jail time for ML failure to disclose offences?

A

Fine and up to 5 years

44
Q

Jail time for ML tipping off offence?

A

Fine and up to 2 years jail

45
Q

What are the 3 parts of the JMLSG guidance?

A

1 - general for all firms
2 - sectoral guidance
3 - specialist guidance

46
Q

What is a PEP?

A

An individual in a prominent public position

47
Q

2 stages of ML disclosure?

A

Employee to MRLO
MRLO to NCA

48
Q

What is FATF?

A

Financial Action Task Force

49
Q

Sentence for failing to report suspicion of Terrorism?

A

5 years jail and a fine

50
Q

2 usual difference between Terrorism financing and ML?

A
  • often quite small sums for terrorism
  • can be legitimate funds for terrorism
51
Q

4 new offences under Bribery Act 2010?

A

Offering a bribe
Requesting or receiving a bribe
Bribing foreign official
Corporate offence of failing to prevent bribery

52
Q

Penalties under bribery act?

A

10 yes imprisonment and unlimited fine for corporate offence

53
Q

When is hospitality not considered a bribe?

A

When it has a legitimate business aim and is reasonable and proportionate

54
Q

6 principles firms should employee to prevent bribery?

A

Proportionality
Top level commitment
Risk assessment
Due diligence
Communication
Monitoring and review

55
Q

How long should CDD be kept?

A

5 years after relationship ends (transactions for a max of 10 years)

56
Q

What are the purpose of disclosure rules?

A
  • prompt and fair info in the market
  • specific instances when insider info can be delayed being published
  • sets out insider info confidentiality requirements
57
Q

2 requirements for disclosure rules around control of inside info?

A
  • Denying access
  • breaches of confidentiality
58
Q

What is the broad aim of the takeover code?

A

Ensure shareholders are treated fairly and not denied opportunity to review merits of a takeover

59
Q

What is the takeover code NOT concerned with?

A

Financial advantages
Competition policy

60
Q

6 principles of takeover code

A
  • shareholders in same class treated the same
  • sufficient time to review
  • board of offeree must act in best interests of the company
  • no false markers
  • offerer must be able to fulfil cash obligation
  • not hinder company for too long
61
Q

EU disclosure level for share holdings?

A

Holding reaches, exceeds or moves below

5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%

62
Q

UK disclosure level for share holdings?

A

3% and each percentage point increase above that

63
Q

Do you need to hold the shares to be required to disclose?

A

DTR applied even if you have 3% voting rights

64
Q

Voting rights attached to shares don’t apply when?

A
  • Shares settling between trading days
  • custodian hold
  • market makers holding less than 10%
  • shares of less than 5% in investment firm trading book
  • collateral
  • stabilisation purposes
65
Q

What connected parties shares are included under the disclosure rules?

A

Partner, kids
Companies controlled by investor (1/3)
Concert parties (agreement to vote together)

66
Q

How long does a firm have to report their transactions (usual trading) to FCA?

A

Close the following working day

67
Q

What is exempt from UK MIFIR reporting?

A

Stock lending
Repos
Borrowing transactions

68
Q

How monitors the transaction reports?

A

FCAs transaction monitoring unit

69
Q

Who is responsible for trade reporting?

A

Most senior party to the trade (or selling member if equal)

70
Q

What is the ICO?

A

Information commissioners office

71
Q

What is the ICO enforcement penalties?

A

Higher: 17.5M or 4% of worldwide turnover
Standard: 8.7M Or 2% of turnover worldwide

72
Q

What are the capital requirement directive pillars?

A

1 - min capital for credit, market and operational risks
2 - firms should cover additional risks
3 - disclosure to improve market discipline

73
Q

3 tiers of capital under CRD?

A

1 - permanent share, reserves, profits
2 - long term subordinated debt
3 - short term subordinated debt and trading books

UK Regulation (6 decks)

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